Executive Secretary Paquito Ochoa Jr.
President Benigno Aquino III has signed a new executive order to help cash-strapped businesses.
Under Executive Order No. 68, a new monetization program now allows qualified business taxpayers to convert to cash their tax credit certificates (TCCs). Government financial institutions will serve as trustee banks for this purpose.
Funding for the program, however, has yet to be approved by Congress.
“We believe that with the issuance of EO 68, we will be able to provide a speedy solution to the liquidity concerns of VAT-registered taxpayers, thereby contributing to the goal of President Aquino and his administration of making the country more friendly for business and improving the overall investment climate in the country,” said Executive Secretary Paquito Ochoa Jr., who signed the order on March 27.
The move seeks to make the Philippines “more friendly for business,” Ochoa added.
The new program provides qualified taxpayers the option to receive a discounted equivalent of an outstanding TCC in advance, or to collect the full cash value after a maturity date to be determined by the Bureau of Internal Revenue or the Bureau of Customs.
The monetization program will be good from 2012 until Mr. Aquino steps down in 2016.
Funds for the program are included in the budget submitted by the administration to Congress.
Should the funding be approved, the Department of Budget and Management would release the cash equivalent to qualified TCC holders.
“The DBM has cited studies that indicate the Philippines is the only country in the Asean region using TCCs to refund VAT claims and it takes the longest time to issue and allow its utilization compared to other countries like Indonesia, Thailand and Vietnam,” said Ochoa in a statement.